Author Topic: GXE - Gear Energy  (Read 37332 times)

investor-man

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Re: GXE - Gear Energy
« Reply #100 on: May 17, 2018, 06:42:03 AM »
This has been a good one to reflect on. It wasn't hard for me to buy this one, but it certainly wasn't something to go out and brag about while oil companies were going bankrupt left and right. While I do live in NYC, I'm glad I don't work on Wall Street. I could see how holding this would have been tough to share with colleagues, even though clearly a good decision.
Ferengi Rule of Acquisition #3 "Never spend more for an acquisition than you have to."


tombgrt

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Re: GXE - Gear Energy
« Reply #101 on: May 21, 2018, 10:42:49 AM »
Some fool just bought GENGF at a 25% premium to the Canadian stock price. Probably assumed he was buying GXE instead of GENGF.

Let the frenzy begin!

This has been a good one to reflect on. It wasn't hard for me to buy this one, but it certainly wasn't something to go out and brag about while oil companies were going bankrupt left and right. While I do live in NYC, I'm glad I don't work on Wall Street. I could see how holding this would have been tough to share with colleagues, even though clearly a good decision.

Yes. Another neglected COFB topic too. Too small and ugly, taking too long. Certainly wasn't brooming with confidence during early 2016. I've owned it for more than 2 years, it's hopefully time to profit. Was a 15% position during much of 2016 - 2017 and raised it to 30% late 2017. We'll see how well siting tight goes as we - hopefully - move up.  8)
« Last Edit: May 21, 2018, 10:49:13 AM by tombgrt »

Pondside47

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Re: GXE - Gear Energy
« Reply #102 on: May 25, 2018, 10:16:11 AM »
I have read from a few well known value investors that investing is determining the private market value of an asset and to try to buy it for less on the stock market.

Currently, Gear Energy trades for $33,300 per boe/d and carries $17,000 of debt per boe/d. Its EV/2P of reserves is $8.32/boe.

On the other hand, Twin Butte trades for $18,300 per boe/d (using current price of convertible) and carries $20,700 of debt per boe/d (convertible at par). Its EV/2P of reserves is $4.64/boe.

A bit less than half of Twin Butte is the exact same asset as Gear or Lloydminster heavy oil produced with low cost horizontal wells. The other half is Provost medium oil or wells that are also shallow with similar cost but, with a product that sells for more than heavy oil.

It appears that Twin Butte cannot find a buyer for itself at around these prices. So if you are a Gear Energy holder and are also exposed to bank credit line redetermination, I do believe that you have to ask yourself what is your margin of safety at current price? What is your downside if the banks also decide to reduce again their credit line and demand some repayment?

Cardboard

Bringing up a post from 2 years ago. Looking back, what can we learn from the bankruptcy of Twin Butte vs the survival of Gear Energy? In other words, regardless of the outcome today, was it the right decision to hold on to Gear at that time when Twin Butte could not find a buyer for its assets? Was it the fact that Gear had more drilling location than what's booked into the 2P reserve? Or was it because Gear's founder and management were simply more resourceful in terms of lining up rescue compared the the management of Twin Butte?


investor-man

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Re: GXE - Gear Energy
« Reply #103 on: May 29, 2018, 06:10:28 PM »
I have followed and read much of Cardboard's advice and found it very helpful and rewarding, so I think this simply echoes what we all know to be true: none of us can predict the future.

As to my investment in Gear - it just read like "value-porn". The monthly letters are amazing. The CEO is amazing. The board members are amazing. I've noticed that every investor I admire consistently states that companies like this are where they've made the most money, and that they wished they had avoided the cigar butt investments even though some of them work out. That's is what I want to learn from this.
Ferengi Rule of Acquisition #3 "Never spend more for an acquisition than you have to."